[Rev. 11/21/2013 1:19:10
PM--2013]
CHAPTER 695E - LIABILITY RISK RETENTION
GENERAL PROVISIONS
NRS 695E.010 Statement
of purpose.
NRS 695E.020 Definitions.
NRS 695E.030 “Completed
operations liability” defined.
NRS 695E.040 “Domicile”
defined.
NRS 695E.050 “Hazardous
financial condition” defined.
NRS 695E.060 “Liability”
defined.
NRS 695E.070 “Personal
risk liability” defined.
NRS 695E.080 “Plan
of operation” defined.
NRS 695E.090 “Product
liability” defined.
NRS 695E.100 “Purchasing
group” defined.
NRS 695E.110 “Risk
retention group” defined.
PURCHASING GROUPS
NRS 695E.120 Requirements.
NRS 695E.125 Notification
of change in information provided to Commissioner.
NRS 695E.130 Purchase
of insurance; exemption from certain laws.
NRS 695E.135 Extent
of liability for payment of premium tax.
RISK RETENTION GROUPS
NRS 695E.140 Requirements.
NRS 695E.150 Identifying
statement; plan of operation; Commissioner to serve as agent for service of
process; filing fee; transmission of plan of operation by Commissioner.
NRS 695E.160 Submission
of financial statement, examinations, audits and other information.
NRS 695E.170 Applicability
of other provisions.
NRS 695E.180 Notice
required in policy.
NRS 695E.190 Examination
by Commissioner; compliance with order of Commissioner; enforcement of order
issued by federal court.
NRS 695E.200 Prohibited
acts.
MISCELLANEOUS PROVISIONS
NRS 695E.210 Applicability
of other provisions; fines and penalties for violation of chapter.
NRS 695E.220 Annual
notice of intent to continue doing business in Nevada.
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GENERAL PROVISIONS
NRS 695E.010 Statement of purpose. The
purpose of this chapter is to regulate the formation and operation in this
state of organizations formed pursuant to the provisions of the Liability Risk
Retention Act of 1986.
(Added to NRS by 1987, 1327)
NRS 695E.020 Definitions. As
used in this chapter, the words and terms defined in NRS
695E.030 to 695E.110, inclusive, have the
meanings ascribed to them in those sections.
(Added to NRS by 1987, 1327)
NRS 695E.030 “Completed operations liability” defined.
1. “Completed operations liability” means
liability arising out of the installation, maintenance or repair of any product
at a site that is not owned or controlled by:
(a) Any person who performs the work; or
(b) Any person who hires an independent
contractor to perform the work.
2. The term includes liability for
activities that are completed or abandoned before the occurrence giving rise to
the liability.
(Added to NRS by 1987, 1328)
NRS 695E.040 “Domicile” defined. “Domicile”
means:
1. For a corporation, the state in which
it is incorporated; and
2. For any other person, the state of the
person’s principal place of business.
(Added to NRS by 1987, 1328)
NRS 695E.050 “Hazardous financial condition” defined. “Hazardous financial condition” means that,
based on its present or reasonably anticipated financial condition, a risk
retention group, although not yet financially impaired or insolvent, is
unlikely to be able to:
1. Meet obligations to policyholders with
respect to known claims and reasonably anticipated claims; or
2. Pay other obligations in the normal
course of business.
(Added to NRS by 1987, 1328)
NRS 695E.060 “Liability” defined.
1. “Liability” means legal liability for
damages, including costs of defense, legal costs and fees, and other expenses
for claims, because of injuries to other persons, damage to their property, or
other damage or loss to those persons resulting from or arising out of any:
(a) Business, whether or not conducted for
profit, or any trade, product, services, whether or not professional, or any
premises or operations; or
(b) Activity of any state or local government, or
any agency or political subdivision thereof.
2. The term does not include personal risk
liability and an employer’s liability concerning its employees, other than
legal liability under the Federal Employers’ Liability Act.
(Added to NRS by 1987, 1328)
NRS 695E.070 “Personal risk liability” defined. “Personal
risk liability” means liability for damages because of injury to any person,
damage to property, or other loss or damage resulting from any personal,
familial or household responsibilities or activities.
(Added to NRS by 1987, 1328)
NRS 695E.080 “Plan of operation” defined. “Plan
of operation” means an analysis of the expected activities and results of a
risk retention group, including:
1. The coverages, deductibles, limits of
coverage, rates and systems of rating classification for each line of insurance
the group intends to offer;
2. Historical and expected loss experience
of the proposed members, and national experience of similar exposures to the
extent that this experience is reasonably available;
3. Pro forma financial statements and
projections;
4. Appropriate opinions by a qualified,
independent casualty actuary, including a determination of minimum premium or
participation levels required to commence operations and to prevent a hazardous
financial condition;
5. Identification of management,
underwriting procedures, policies for investment and methods for managerial
oversight;
6. Identification of each state in which
the group has obtained, or sought to obtain, a charter and a license, and a
description of the status of the group in each of those states;
7. Information that is deemed sufficient
by the Commissioner to verify that members of the group are engaged in business
activities similar or related with respect to the liability to which they are
exposed because of any related, similar or common business, trade, product,
service, premise or operation; and
8. Such other matters as are prescribed by
the Commissioner for liability insurers authorized by the insurance laws of the
state in which the risk retention group is chartered.
(Added to NRS by 1987, 1328; A 2013, 3374)
NRS 695E.090 “Product liability” defined. “Product
liability” means liability for damages because of any personal injury, death,
emotional harm, consequential economic damage or damage to property, including
damages resulting from the loss of use of property, arising out of the
manufacture, design, importation, distribution, packaging, labeling, lease or
sale of a product, but does not include the liability of any person for those
damages if the product involved was in the possession of that person when the incident
giving rise to the claim occurred.
(Added to NRS by 1987, 1329)
NRS 695E.100 “Purchasing group” defined. “Purchasing
group” means any group which:
1. Has as one of its purposes the purchase
of liability insurance on a group basis;
2. Purchases such insurance only for its
members and only to cover their similar or related exposure to liability, as
described in subsection 3;
3. Is composed of members whose businesses
or activities are similar or related with respect to the liability to which
they are exposed by virtue of any related, similar or common business, trade,
product, services, premises or operations; and
4. Is domiciled in any state.
(Added to NRS by 1987, 1329)
NRS 695E.110 “Risk retention group” defined. “Risk
retention group” means any corporation or association with limited liability
that is formed under the laws of any state, Bermuda or the Cayman Islands:
1. Whose primary activity consists of
assuming and spreading all or any portion of the exposure of its corporation or
association members to liability;
2. Which is organized primarily to conduct
the activity described in subsection 1;
3. Which:
(a) Is chartered and licensed as a liability
insurer and authorized to transact insurance under the laws of any state; or
(b) Before January 1, 1985, was chartered or
licensed and authorized to transact insurance under the laws of Bermuda or the
Cayman Islands and, before that date, had certified to the Commissioner of
Insurance of at least one state that it satisfied the state’s requirements for
capitalization, except that such a group is considered to be a risk retention
group only if it has been engaged in business continuously since that date and
only for the purpose of continuing to provide insurance to cover product
liability or completed operations liability;
4. Which does not exclude any person from
membership in the group solely to provide for members of the group a
competitive advantage over an excluded person;
5. Which has as its:
(a) Owners only persons who comprise the
membership of the risk retention group and who are provided insurance by the
risk retention group; or
(b) Sole owner an organization which has as its:
(1) Members only persons who comprise the
membership of the risk retention group; and
(2) Owners only persons who comprise the
membership of the risk retention group and who are provided insurance by the
group;
6. Whose members are engaged in businesses
or activities similar or related with respect to the liability to which they
are exposed by virtue of any related, similar or common business, trade,
product, services, premises or operations;
7. Whose activities do not include the
provision of insurance other than:
(a) Liability insurance for assuming and
spreading all or any portion of the liability of the members of the group; and
(b) Reinsurance with respect to the liability of
any other risk retention group, or any member of such a group, that is engaged
in a business or activity such that the other group or member meets the
requirements of subsection 6 for membership in the risk retention group that
provides reinsurance; and
8. The name of which includes the phrase
“risk retention group.”
(Added to NRS by 1987, 1329; A 1995, 1780; 2011, 3397)
PURCHASING GROUPS
NRS 695E.120 Requirements. A
purchasing group that intends to conduct business in this state shall register
with the Commissioner and:
1. Furnish notice to the Commissioner
that:
(a) Identifies the state in which the group is
domiciled;
(b) Specifies the lines and classifications of
liability insurance that the purchasing group intends to purchase;
(c) Identifies the insurer from which the group
intends to purchase its insurance and the domicile of the insurer;
(d) Identifies the principal place of business of
the group;
(e) Identifies all other states in which the
group intends to do business;
(f) Specifies the method by which insurance will
be offered to its members whose risks are resident, located or to be performed
in this State;
(g) Provides the name, address and telephone
number of each person, if any, through whom insurance will be offered to its
members whose risks are resident, located or to be performed in this State; and
(h) Provides such other information as the
Commissioner requires to verify and determine:
(1) Its qualification as a purchasing
group;
(2) Where the purchasing group is located;
and
(3) The appropriate tax treatment of the
purchasing group; and
2. Appoint the Commissioner as its agent
solely to receive service of legal process, and pay the fee for filing a power
of attorney required by subsection 4 of NRS
680B.010, except that this subsection does not apply to a purchasing group
that:
(a) Was domiciled before April 1, 1986, and on
and after October 27, 1986, in any state;
(b) Before and after October 27, 1986, purchased
its insurance from an insurer licensed in any state;
(c) Was a purchasing group under the requirements
of the Product Liability Risk Retention Act of 1981 before October 27, 1986;
and
(d) Does not purchase insurance that was not
authorized for an exemption under that act, as in effect before October 27,
1986.
(Added to NRS by 1987, 1330; A 1995, 1781; 2013, 3374)
NRS 695E.125 Notification of change in information provided to Commissioner. A purchasing group shall notify the
Commissioner of any change in any of the information required pursuant to
subsection 1 of NRS 695E.120, within 10 days after
the information ceases to be accurate.
(Added to NRS by 1995, 1780)
NRS 695E.130 Purchase of insurance; exemption from certain laws.
1. Except as otherwise provided in chapter 685A of NRS, a purchasing group shall
not purchase insurance from an unauthorized insurer or a risk retention group
that is not chartered or registered in this state.
2. A purchasing group is exempt from any
law of this state that relates to the formation or prohibition of groups for
the purchase of insurance, and any law that would discriminate against a
purchasing group or its members.
3. An insurer is exempt from any law of
this state that prohibits providing, or offering to provide, to a purchasing
group or its members advantages based on their loss and expense experiences not
afforded to other persons with respect to rates, policy forms, coverages or
other matters.
4. A purchasing group that obtains
liability insurance from a surplus lines insurer or a risk retention group
shall inform each of the members of the purchasing group which have a risk
resident or located in this state that the risk is not protected by an
insurance insolvency guaranty fund in this state, and that the risk retention
group or insurer may not be subject to all insurance laws and regulations of
this state.
5. No purchasing group may purchase
insurance providing for a deductible or self-insured retention applicable to
the group as a whole, but the coverage may provide for a deductible or
self-insured retention applicable to individual members of the group.
6. Purchases of insurance by purchasing
groups are subject to the same standards regarding aggregate limits which are
applicable to all purchases of group insurance.
(Added to NRS by 1987, 1330; A 1995, 1782; 2009, 1819)
NRS 695E.135 Extent of liability for payment of premium tax. All premiums paid by a purchasing group or any
member of the purchasing group for insurance on risks resident, located or to
be performed in this state are subject to the payment of premium taxes and any
related fines or penalties pursuant to chapters
680A, 680B and 685A of NRS. To the extent that premiums are
paid by a purchasing group or any member of the purchasing group:
1. To an authorized insurer, the insurer
shall pay the premium taxes and any related fines or penalties pursuant to chapters 680A and 680B of NRS;
2. To a surplus lines broker for insurance
procured as surplus lines coverage, the surplus lines broker shall pay the
premium taxes and any related fines or penalties pursuant to chapter 685A of NRS; or
3. To an unauthorized insurer for
insurance independently procured by the purchasing group or any member of the
group, premium taxes and any related fines and penalties are payable first by
the purchasing group, and if not paid by the purchasing group, then by each of
its members, pursuant to NRS 680B.040.
(Added to NRS by 1995, 1780)
RISK RETENTION GROUPS
NRS 695E.140 Requirements.
1. A risk retention group seeking to be
chartered in this State must obtain a certificate of authority pursuant to chapter 694C of NRS to transact liability
insurance and, except as otherwise provided in this chapter, must comply with:
(a) All of the laws, regulations and requirements
applicable to liability insurers in this State, unless otherwise approved by
the Commissioner; and
(b) The provisions of NRS
695E.150 to 695E.210, inclusive, to the extent
that those provisions do not limit or conflict with the provisions with which
the group is required to comply pursuant to paragraph (a).
2. A risk retention group applying to be
chartered in this State must submit to the Commissioner in summary form:
(a) The identities of:
(1) All members of the group;
(2) All organizers of the group;
(3) Those persons who will provide
administrative services to the group; and
(4) Any person who will influence or
control the activities of the group;
(b) The amount and nature of initial
capitalization of the group;
(c) The coverages to be offered by the group; and
(d) Each state in which the group intends to
operate.
3. Before it may transact insurance in any
state, the risk retention group must submit to the Commissioner for approval by
the Commissioner a plan of operation. The risk retention group shall submit an
appropriate revision in the event of any subsequent material change in any item
of the plan of operation within 10 days after the change. The group shall not
offer any additional kinds of liability insurance, in this State or in any
other state, until a revision of the plan is approved by the Commissioner.
4. A risk retention group chartered in
this State must file with the Commissioner on or before February 1 of each year
a statement containing information concerning the immediately preceding year,
which must be:
(a) Submitted in a form prescribed by the
National Association of Insurance Commissioners;
(b) Prepared in accordance with the Accounting
Practices and Procedures Manual adopted by the National Association of
Insurance Commissioners and effective on January 1, 2001, and as amended by the
National Association of Insurance Commissioners after that date; and
(c) Submitted on a diskette, if required by the
Commissioner.
5. The Commissioner shall transmit to the
National Association of Insurance Commissioners a copy of:
(a) All information submitted by a risk retention
group to the Commissioner pursuant to subsections 2 and 4; and
(b) Any revisions to a plan of operation
submitted to the Commissioner pursuant to subsection 3.
6. A risk retention group chartered in a
state other than Nevada that is seeking to transact insurance as a risk
retention group in this State must comply with the provisions of NRS 695E.150 to 695E.210,
inclusive.
(Added to NRS by 1987, 1330; A 1995, 1782; 2005, 2158; 2013, 3375)
NRS 695E.150 Identifying statement; plan of operation; Commissioner to serve
as agent for service of process; filing fee; transmission of plan of operation
by Commissioner.
1. Before transacting insurance in this
state, a risk retention group must submit to the Commissioner:
(a) A statement of registration identifying:
(1) Each state in which the risk retention
group is chartered or licensed as a liability insurer;
(2) The date of its charter;
(3) Its principal place of business; and
(4) Such other information, including
information concerning its membership, as the Commissioner requires to verify
its qualification as a risk retention group;
(b) A copy of its plan of operation and any
revisions of the plan submitted to its state of domicile, except with respect
to any line or classification of liability that was:
(1) Defined in the Product Liability Risk
Retention Act of 1981 before October 27, 1986; and
(2) Offered before that date by a risk
retention group that had been chartered and operating for not less than 3 years
before that date; and
(c) A statement appointing the Commissioner as
its agent for service of process pursuant to NRS 680A.250, together with the fee for
filing a power of attorney required by subsection 4 of NRS 680B.010.
2. The Commissioner shall, upon receipt of
any revisions of a plan of operation provided by a risk retention group
pursuant to paragraph (b) of subsection 1, transmit a copy of those revisions
to the National Association of Insurance Commissioners.
(Added to NRS by 1987, 1331; A 1995, 1783; 2013, 3376)
NRS 695E.160 Submission of financial statement, examinations, audits and
other information. A risk
retention group transacting insurance in this state shall submit to the
Commissioner:
1. A copy of the group’s financial
statement submitted to its state of domicile, which must be certified by an
independent public accountant and contain a statement of opinion on its
reserves for loss and expenses of loss adjustment made by a member of the
American Academy of Actuaries or another qualified specialist in reserves for
loss;
2. A copy of each examination of the risk
retention group, certified by the Commissioner or other public officer
conducting the examination;
3. Upon the request of the Commissioner, a
copy of any audit performed with respect to the risk retention group; and
4. Such other information as the
Commissioner requires to verify its continuing qualification as a risk
retention group.
(Added to NRS by 1987, 1331)
NRS 695E.170 Applicability of other provisions.
1. A risk retention group and its agents
and representatives are subject to the provisions of NRS 686A.010 to 686A.310, inclusive. Any injunction
obtained pursuant to those sections must be obtained from a court of competent
jurisdiction.
2. All premiums paid for coverages within
this state to a risk retention group are subject to the provisions of chapter 680B of NRS. Each risk retention group
shall report all premiums paid to it and shall pay the taxes on premiums and
any related fines or penalties for risks resident, located or to be performed
in the state.
3. Any person acting as an agent or a
broker for a risk retention group pursuant to NRS
695E.210 shall:
(a) Report to the Commissioner each premium for
direct business for risks resident, located or to be performed in this State
which the person has placed with or on behalf of a risk retention group that is
not chartered in this State.
(b) Maintain a complete and separate record of
each policy obtained from each risk retention group. Each record maintained
pursuant to this subsection must be made available upon request by the
Commissioner for examination pursuant to NRS
679B.240, and must include, for each policy and each kind of insurance
provided therein:
(1) The limit of liability;
(2) The period covered;
(3) The effective date;
(4) The name of the risk retention group
which issued the policy;
(5) The gross annual premium charged; and
(6) The amount of return premiums, if any.
4. As used in this section, “premiums for
direct business” means any premium written in this State for a policy of
insurance. The term does not include any premium for reinsurance or for a
contract between members of a risk retention group.
(Added to NRS by 1987, 1331; A 1995, 1633, 1783; 1997, 549; 2013, 3376)
NRS 695E.180 Notice required in policy. A
policy issued by a risk retention group must contain in 10-point type on the
front page and the declaration page, the following notice:
NOTICE
This policy is issued by your
risk retention group. Your risk retention group may not be subject to all of
the insurance laws and regulations of your state. State insolvency guaranty
funds are not available for your risk retention group.
(Added to NRS by 1987, 1332)
NRS 695E.190 Examination by Commissioner; compliance with order of
Commissioner; enforcement of order issued by federal court.
1. A risk retention group shall submit to
an examination by the Commissioner to determine its financial condition if the
commissioner of insurance of the jurisdiction in which the group is chartered
does not initiate such an examination within 60 days after a request by the
Commissioner of Insurance of this state. The examination must be coordinated to
avoid unjustified repetition and conducted in an expeditious manner. The
Commissioner shall give due consideration to the procedure outlined in the
handbook for examiners sponsored by the National Association of Insurance
Commissioners.
2. A risk retention group not chartered in
this state and doing business in this state shall comply with a lawful order
issued in a proceeding for voluntary dissolution or in a delinquency proceeding
commenced by a commissioner of insurance of any state if there has been a
finding of financial impairment after an examination conducted pursuant to
subsection 1.
3. An order issued by a District Court of
the United States, entered upon a finding that a risk retention group is in a
hazardous financial condition, that enjoins the group from conducting
operations or transacting insurance in any state, must be enforced by the
district courts of this state.
(Added to NRS by 1987, 1332)
NRS 695E.200 Prohibited acts. A
risk retention group shall not:
1. Transact insurance with any person who
is not eligible for membership in the risk retention group;
2. Conduct any business in this state if
an insurer is directly or indirectly a member or owner of the group, unless all
the members of the group are insurers;
3. Transact insurance or otherwise operate
while financially impaired or in a hazardous financial condition;
4. Issue any insurance policy with terms
providing, or which have been construed as providing, coverage prohibited by a
specific statute of this state or declared unlawful by the highest court of
this state which has rendered a judgment concerning the legality of that coverage;
or
5. Join or contribute financially to the
Nevada Insurance Guaranty Association, or to any similar organization or fund
in this state, and the provisions of chapter
687A of NRS do not apply to a risk retention group. A risk retention group
and its insureds shall not accept any benefit from such an organization or fund
for claims arising out of the operation of the risk retention group.
(Added to NRS by 1987, 1332; A 1995, 1783)
MISCELLANEOUS PROVISIONS
NRS 695E.210 Applicability of other provisions; fines and penalties for
violation of chapter.
1. Any person acting, or offering to act,
as an agent or broker for a purchasing group, a member of a purchasing group
under the group policy, or a risk retention group transacting insurance in this
state is subject to the provisions of chapters
683A and 685A of NRS.
2. Except as otherwise provided in this
chapter, the provisions of chapter 679B of
NRS apply to purchasing groups and risk retention groups, and to the provisions
of this chapter, to the extent that the provisions of chapter 679B of NRS are not specifically
preempted by the Product Liability Risk Retention Act of 1981, as amended by
the Risk Retention Amendments of 1986.
3. A risk retention group that violates
any provision of this chapter is subject to the fines and penalties, including
revocation of its right to do business in this state, applicable to licensed
insurers under this title.
(Added to NRS by 1987, 1333; A 1995, 1784)
NRS 695E.220 Annual notice of intent to continue doing business in Nevada. On or before March 1 of each year, a
purchasing group and a risk retention group shall submit to the Commissioner a
written notice of its intention to continue doing business in Nevada.
(Added to NRS by 1991, 2037)
